The law firm of Goodrich & Reely, PLLC, serves clients throughout Montana.

The promise of a legally binding contract

On Behalf of | Oct 13, 2023 | Business Law

There are many legal matters involved in forming and running a business. These can including the legal aspects of business formation, employment, financing, real estate deals and, of possibly litigation. Underlying all of these legal matters you will probably find some type of contract.

A business contract consists of promises made between two entities. Technically, some types of contracts don’t have to be in writing, but it’s wise to get everything in writing anyway. This helps both parties understand exactly what is expected of them, it provides a paper trail in case anything goes wrong, and it makes it a lot easier to resolve any disputes if they later arise.

Promises and obligations

So, what are the basics of a good contract? There are a few elements for our readers to know. First, both parties to the contract must be voluntarily obligating themselves to the deal. It must be offered and accepted properly – both sides knowing that they are entering into a contract that is mutually, legally binding. And, both sides must have the legal capacity to enter into the contract. 

Of course, there may be other elements to a contract, depending on the nature of the relationship that is being created and the promises that must be kept. A real estate contract, for example, will be significantly different than a partnership contract. But, regardless of the subject matter, business leaders who sign a contract are, in essence, making a promise that they must keep. And, if they don’t, breach of the contract could lead to litigation.